Nick Forrest | Source | Partner - Policy, Regulation and Economics at Baringa
Nick Forrest
Nick has more than 25 years of professional economics and finance consulting experience. He uses economics to solve complex business, regulatory and policy issues for companies, regulators, investors and governments. A published author, Nick has also written thought leadership reports and book contributions on topics including reforming financial services and strategies for growing sectors. Nick’s previous roles include Chief Economist and UK Economics Consulting Leader at PwC, and Director of Analysis at the UK Department of Business.
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Baringa
Partner - Policy, Regulation and Economics
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‘Higher-for-longer’ rates saddle companies with $381B in added costs
"The new higher-interest-rate environment might trigger a decaffeinated repeat of the 2008 financial crisis,” according to a partner at Baringa.
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Higher interest rates could cost US companies $380B in 'slowly unfolding crisis'
Companies that refinance between this year and 2030 will pay an additional $381 billion in interest costs thanks to the rapid spike in borrowing costs.
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Fed Rate Cuts: A Double-Edged Sword for Corporate Debt
Nick warns that despite potential rate cuts, U.S. companies face a refinancing debt cliff. “The cost of servicing debt will continue to rise,” with $3 trillion in loans due in 2024. Companies may incur $381 billion in additional interest expenses by 2030, challenging financial stability.
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“Companies have navigated a variety of crises over the past few decades, but you have to go back a long time to find the last instance of refinancing costs being this high...This is the biggest change to debt refinancing costs that we’ve ever seen and it presents a different wave of challenges than what companies have recently experienced." - CFO Dive
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"We're already seeing default rates rise. They're above where they were before COVID, before the energy crisis. But we don't see a quick spike because this is not a trigger, like the beginning of COVID or the Ukraine war. So it'll be slow moving. I see a gradual increase as this high-interest debt cost moves its way through the system." - FoxBusiness.com
